11. Torres-Madrid Brokerage, Inc. v.
FEB Mitsui Marine Insurance Four BMT trucks picked up the shipment from the port at about 11:00
Co., Inc.
July 11, 2016
G.R. No. 194121
TORRES-MADRID BROKERAGE, INC., Petitioner  garage for Laguna.5 However, only three trucks arrived at Sony’s
vs.
FEB MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P.
MANALAST AS, doing business under the name of BMT
TRUCKING SERVICES, Respondents
DECISION
BRION, J.:
We resolve the petition for review on certiorari challenging the Court
of Appeals' (CA) October 14, 2010 decision in CA-G.R. CV No.
91829.1
The CA affirmed the Regional Trial Court's (RTC) decision in Civil
Case No. 01-1596, and found petitioner Torres-Madrid Brokerage,
Inc. (TMBI) and respondent Benjamin P. Manalastas jointly and
solidarily liable to respondent FEB Mitsui Marine Insurance Co.,
Inc. (Mitsui) for damages from the loss of transported cargo.
Antecedents
On October 7, 2000, a shipment of various electronic goods from
Thailand and Malaysia arrived at the Port of Manila for Sony
Philippines, Inc. (Sony). Previous to the arrival, Sony had engaged
the services of TMBI to facilitate, process, withdraw, and deliver the
shipment from the port to its warehouse in Biñan, Laguna.2
TMBI – who did not own any delivery trucks – subcontracted the
services of Benjamin Manalastas’ company, BMT Trucking
Services (BMT), to transport the shipment from the port to the Biñan
warehouse.3 Incidentally, TMBI notified Sony who had no objections to
the arrangement.4
a.m. of October 7, 2000. However, BMT could not immediately
undertake the delivery because of the truck ban and because the
following day was a Sunday. Thus, BMT scheduled the delivery on
October 9, 2000.
In the early morning of October 9, 2000, the four trucks left BMT’s
Biñan warehouse.
At around 12:00 noon, the truck driven by Rufo Reynaldo
Lapesura (NSF-391) was found abandoned along the Diversion Road
in Filinvest, Alabang, Muntinlupa City.6 Both the driver and the
shipment were missing.
Later that evening, BMT’s Operations Manager Melchor Manalastas
informed Victor Torres, TMBI’s General Manager, of the
development.7 They went to Muntinlupa together to inspect the truck
and to report the matter to the police.8
Victor Torres also filed a complaint with the National Bureau of
Investigation (NBI) against Lapesura for "hijacking."9The complaint
resulted in a recommendation by the NBI to the Manila City
Prosecutor’s Office to prosecute Lapesura for qualified theft.10
TMBI notified Sony of the loss through a letter dated October 10,
2000.11 It also sent BMT a letter dated March 29, 2001, demanding
payment for the lost shipment. BMT refused to pay, insisting that the
goods were "hijacked."
In the meantime, Sony filed an insurance claim with the Mitsui, the
insurer of the goods. After evaluating the merits of the claim, Mitsui
paid Sony PHP7,293,386.23 corresponding to the value of the lost
goods.12
After being subrogated to Sony’s rights, Mitsui sent TMBI a demand
letter dated August 30, 2001 for payment of the lost goods. TMBI
refused to pay Mitsui’s claim. As a result, Mitsui filed a complaint
against TMBI on November 6, 2001,
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TMBI, in turn, impleaded Benjamin Manalastas, the proprietor of BMT,
as a third-party defendant. TMBI alleged that BMT’s driver, Lapesura,
was responsible for the theft/hijacking of the lost cargo and claimed
BMT’s negligence as the proximate cause of the loss. TMBI prayed
that in the event it is held liable to Mitsui for the loss, it should be
reimbursed by BMT.
At the trial, it was revealed that BMT and TMBI have been doing
business with each other since the early 80’s. It also came out that
there had been a previous hijacking incident involving Sony’s cargo in
1997, but neither Sony nor its insurer filed a complaint against BMT or
TMBI.13
On August 5, 2008, the RTC found TMBI and Benjamin Manalastas
jointly and solidarily liable to pay Mitsui PHP 7,293,386.23 as actual
damages, attorney’s fees equivalent to 25% of the amount claimed,
and the costs of the suit.14 The RTC held that TMBI and Manalastas
were common carriers and had acted negligently.
Both TMBI and BMT appealed the RTC’s verdict.
TMBI denied that it was a common carrier required to
exercise extraordinary diligence. It maintains that it exercised the
diligence of a good father of a family and should be absolved of
liability because the truck was "hijacked" and this was a fortuitous
event.
BMT claimed that it had exercised extraordinary diligence over the
lost shipment, and argued as well that the loss resulted from a
fortuitous event.
On October 14, 2010, the CA affirmed the RTC’s decision but reduced
the award of attorney’s fees to PHP 200,000.
The CA held: (1) that "hijacking" is not necessarily a fortuitous event
because the term refers to the general stealing of cargo during
transit;15 (2) that TMBI is a common carrier engaged in the business of
transporting goods for the general public for a fee;16 (3) even if the
"hijacking" were a fortuitous event, TMBI’s failure to observe
extraordinary diligence in overseeing the cargo and adopting security
measures rendered it liable for the loss;17 and (4) even if TMBI had not
been negligent in the handling, transport and the delivery of the
shipment, TMBI still breached its contractual obligation to Sony when
it failed to deliver the shipment.18
TMBI disagreed with the CA’s ruling and filed the present petition on
December 3, 2010.
The Arguments
TMBI’s Petition
TMBI insists that the hijacking of the truck was a fortuitous event. It
contests the CA’s finding that neither force nor intimidation was used
in the taking of the cargo. Considering Lapesura was never found, the
Court should not discount the possibility that he was a victim rather
than a perpetrator.19
TMBI denies being a common carrier because it does not own a
single truck to transport its shipment and it does not offer transport
services to the public for compensation.20 It emphasizes that Sony
knew TMBI did not have its own vehicles and would subcontract the
delivery to a third-party.
Further, TMBI now insists that the service it offered was limited to the
processing of paperwork attendant to the entry of Sony’s goods. It
denies that delivery of the shipment was a part of its obligation.21
TMBI solely blames BMT as it had full control and custody of the
cargo when it was lost.22 BMT, as a common carrier, is presumed
negligent and should be responsible for the loss.
BMT’s Comment
BMT insists that it observed the required standard of care.23 Like the
petitioner, BMT maintains that the hijacking was a fortuitous event –
a force majeure – that exonerates it from liability.24 It points out that
Lapesura has never been seen again and his fate remains a mystery.
BMT likewise argues that the loss of the cargo necessarily showed
that the taking was with the use of force or intimidation.25
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If there was any attendant negligence, BMT points the finger on TMBI
who failed to send a representative to accompany the
shipment.26 BMT further blamed TMBI for the latter’s failure to adopt
security measures to protect Sony’s cargo.27
Mitsui’s Comment
Mitsui counters that neither TMBI nor BMT alleged or proved during
the trial that the taking of the cargo was accompanied with grave or
irresistible threat, violence, or force.28 Hence, the incident cannot be
considered "force majeure" and TMBI remains liable for breach of
contract.
Mitsui emphasizes that TMBI’s theory – that force or intimidation must
have been used because Lapesura was never found – was only
raised for the first time before this Court.29 It also discredits the theory
as a mere conjecture for lack of supporting evidence.
Mitsui adopts the CA’s reasons to conclude that TMBI is a common
carrier. It also points out Victor Torres’ admission during the trial that
TMBI’s brokerage service includes the eventual delivery of the cargo
to the consignee.30
Mitsui invokes as well the legal presumption of negligence against
TMBI, pointing out that TMBI simply entrusted the cargo to BMT
without adopting any security measures despite: (1) a previous
hijacking incident when TMBI lost Sony’s cargo; and (2) TMBI’s
knowledge that the cargo was worth more than 10 million pesos.31
Mitsui affirms that TMBI breached the contract of carriage through its
negligent handling of the cargo, resulting in its loss.
The Court’s Ruling
A brokerage may be considered a
common carrier if it also undertakes to
deliver the goods for its customers
Common carriers are persons, corporations, firms or associations
engaged in the business of transporting passengers or goods or both,
by land, water, or air, for compensation, offering their services to the
public.32 By the nature of their business and for reasons of public
policy, they are bound to observe extraordinary diligence in the
vigilance over the goods and in the safety of their passengers.33
In A.F. Sanchez Brokerage Inc. v. Court of Appeals,34we held that a
customs broker – whose principal business is the preparation of the
correct customs declaration and the proper shipping documents – is
still considered a common carrier if it also undertakes to deliver the
goods for its customers. The law does not distinguish between one
whose principal business activity is the carrying of goods and one who
undertakes this task only as an ancillary activity.35 This ruling has
been reiterated in Schmitz Transport & Brokerage Corp. v. Transport
Venture, Inc.,36Loadmasters Customs Services, Inc. v. Glodel
Brokerage Corporation,37and Westwind Shipping Corporation v.
UCPB General Insurance Co., Inc.38
Despite TMBI’s present denials, we find that the delivery of the goods
is an integral, albeit ancillary, part of its brokerage services. TMBI
admitted that it was contracted to facilitate, process, and clear the
shipments from the customs authorities, withdraw them from the pier,
then transport and deliver them to Sony’s warehouse in Laguna.39
Further, TMBI’s General Manager Victor Torres described the nature
of its services as follows:
ATTY. VIRTUDAZO: Could you please tell the court what is the
nature of the business of [TMBI]?
Witness MR. Victor Torres of Torres Madrid: We are engaged in
customs brokerage business. We acquire the release documents from
the Bureau of Customs and eventually deliver the cargoes to the
consignee’s warehouse and we are engaged in that kind of
business, sir.40
That TMBI does not own trucks and has to subcontract the delivery of
its clients’ goods, is immaterial. As long as an entity holds itself to the
public for the transport of goods as a business, it is considered a
common carrier regardless of whether it owns the vehicle used or has
to actually hire one.41
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Lastly, TMBI’s customs brokerage services – including the
transport/delivery of the cargo – are available to anyone willing to pay
its fees. Given these circumstances, we find it undeniable that TMBI is
a common carrier.
Consequently, TMBI should be held responsible for the loss,
destruction, or deterioration of the goods it transports unless it results
from:
(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers;
(5) Order or act of competent public authority.42
For all other cases - such as theft or robbery – a common carrier is
presumed to have been at fault or to have acted negligently, unless it
can prove that it observed extraordinary diligence.43
Simply put, the theft or the robbery of the goods is not considered a
fortuitous event or a force majeure. Nevertheless, a common carrier
may absolve itself of liability for a resulting loss: (1) if it proves that it
exercised extraordinary diligence in transporting and safekeeping the
goods;44 or (2) if it stipulated with the shipper/owner of the goods to
limit its liability for the loss, destruction, or deterioration of the goods
to a degree less than extraordinary diligence.45
However, a stipulation diminishing or dispensing with the common
carrier’s liability for acts committed by thieves or robbers who do not
act with grave or irresistible threat, violence, or force is void under
Article 1745 of the Civil Code for being contrary to public
policy.46 Jurisprudence, too, has expanded Article 1734’s five
exemptions. De Guzman v. Court of Appeals47 interpreted Article 1745
to mean that a robbery attended by "grave or irresistible threat,
violence or force" is a fortuitous event that absolves the common
carrier from liability.
In the present case, the shipper, Sony, engaged the services of TMBI,
a common carrier, to facilitate the release of its shipment and deliver
the goods to its warehouse. In turn, TMBI subcontracted a portion of
its obligation – the delivery of the cargo – to another common carrier,
BMT.
Despite the subcontract, TMBI remained responsible for the cargo.
Under Article 1736, a common carrier’s extraordinary responsibility
over the shipper’s goods lasts from the time these goods are
unconditionally placed in the possession of, and received by, the
carrier for transportation, until they are delivered, actually or
constructively, by the carrier to the consignee.48
That the cargo disappeared during transit while under the custody of
BMT – TMBI’s subcontractor – did not diminish nor terminate TMBI’s
responsibility over the cargo. Article 1735 of the Civil Code presumes
that it was at fault.
Instead of showing that it had acted with extraordinary
diligence, TMBI simply argued that it was not a common carrier bound
to observe extraordinary diligence. Its failure to successfully establish
this premise carries with it the presumption of fault or negligence, thus
rendering it liable to Sony/Mitsui for breach of contract.
Specifically, TMBI’s current theory – that the hijacking was attended
by force or intimidation – is untenable.
First, TMBI alleged in its Third Party Complaint against BMT that
Lapesura was responsible for hijacking the shipment.49 Further, Victor
Torres filed a criminal complaint against Lapesura with the
NBI.50 These actions constitute direct and binding admissions that
Lapesura stole the cargo. Justice and fair play dictate that TMBI
should not be allowed to change its legal theory on appeal.
Second, neither TMBI nor BMT succeeded in substantiating this
theory through evidence. Thus, the theory remained an unsupported
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allegation no better than speculations and conjectures. The CA In culpa contractual, the plaintiff only needs to establish the existence
therefore correctly disregarded the defense of force majeure. of the contract and the obligor’s failure to perform his obligation. It is
not necessary for the plaintiff to prove or even allege that the obligor’s
TMBI and BMT are not solidarily liable non-compliance was due to fault or negligence because Article 1735
to Mitsui already presumes that the common carrier is negligent. The common
carrier can only free itself from liability by proving that it
We disagree with the lower courts’ ruling that TMBI and BMT are observed extraordinary diligence. It cannot discharge this liability by
solidarily liable to Mitsui for the loss as joint tortfeasors. The ruling shifting the blame on its agents or servants.52
was based on Article 2194 of the Civil Code:
On the other hand, the plaintiff in culpa aquiliana must clearly
Art. 2194. The responsibility of two or more persons who are liable establish the defendant’s fault or negligence because this is the very
for quasi-delict is solidary. basis of the action.53 Moreover, if the injury to the plaintiff resulted
from the act or omission of the defendant’s employee or servant, the
Notably, TMBI’s liability to Mitsui does not stem from a quasi-delict defendant may absolve himself by proving that he observed the
(culpa aquiliana) but from its breach of contract (culpa contractual). diligence of a good father of a family to prevent the damage.54
The tie that binds TMBI with Mitsui is contractual, albeit one that
passed on to Mitsui as a result of TMBI’s contract of carriage with In the present case, Mitsui’s action is solely premised on TMBI’s
Sony to which Mitsui had been subrogated as an insurer who had breach of contract. Mitsui did not even sue BMT, much less prove any
paid Sony’s insurance claim. The legal reality that results from this negligence on its part. If BMT has entered the picture at all, it is
contractual tie precludes the application of quasi-delict based Article because TMBI sued it for reimbursement for the liability that TMBI
2194. might incur from its contract of carriage with Sony/Mitsui. Accordingly,
there is no basis to directly hold BMT liable to Mitsui for quasi-delict.
A third party may recover from a
common carrier for quasi-delict but must BMT is liable to TMBI for breach of their
prove actual negligence contract of carriage

We likewise disagree with the finding that BMT is directly liable to
Sony/Mitsui for the loss of the cargo. While it is undisputed that the
cargo was lost under the actual custody of BMT (whose employee is
the primary suspect in the hijacking or robbery of the shipment), no
direct contractual relationship existed between Sony/Mitsui and BMT.
If at all, Sony/Mitsui’s cause of action against BMT could only arise
from quasi-delict, as a third party suffering damage from the action of
another due to the latter’s fault or negligence, pursuant to Article 2176
of the Civil Code.51
We do not hereby say that TMBI must absorb the loss. By
subcontracting the cargo delivery to BMT, TMBI entered into its own
contract of carriage with a fellow common carrier.
The cargo was lost after its transfer to BMT' s custody based on its
contract of carriage with TMBI. Following Article 1735, BMT is
presumed to be at fault. Since BMT failed to prove that it
observed extraordinary diligence in the performance of its obligation
to TMBI, it is liable to TMBI for breach of their contract of carriage.

We have repeatedly distinguished between an action for breach of In these lights, TMBI is liable to Sony (subrogated by Mitsui) for
contract (culpa contractual) and an action for quasi-delict (culpa breaching the contract of carriage. In tum, TMBI is entitled to
aquiliana). reimbursement from BMT due to the latter's own breach of its contract
of carriage with TMBI. The proverbial buck stops with BMT who may

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either: (a) absorb the loss, or (b) proceed after its missing driver, the
suspected culprit, pursuant to Article 2181.55

WHEREFORE, the Court hereby ORDERS petitioner TorresMadrid

Brokerage, Inc. to pay the respondent FEB Mitsui Marine Insurance
Co", Inc. the following:

a. Actual damages in the amount of PHP 7,293,386.23 plus legal

interest from the time the complaint was filed until it is fully paid;

b. Attorney's foes in the amount of PHP 200,000.00; and

c. Costs of suit.

Respondent Benjamin P. Manalastas is in

turn ORDERED to REIMBURSE Torres-Madrid Brokerage, Inc. of the
above-mentioned amounts.

SO ORDERED.

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